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common size trend analysis of financial st of pharma co

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Jubilant Life Sciences Summer Internship project

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common size trend analysis of financial st of pharma co

  1. 1. Summer Internship Project On Common Size & Trend Analysis of Financial Statements Submitted in partial fulfillment of requirement of Bachelor of Business Administration (B.B.A) General Of Guru Gobind Singh Indraprastha University BBA IV Semester Batch 2011-2014 Submitted by: Submitted to: Name: Utsav Randev Enrollment No.: 06621401711 Jagannath International Management School Vasant Kunj, New Delhi – 110070
  2. 2. Declaration Title of Project Report Common Size & Trend Analysis of Financial Statements I declare (a)That the work presented for assessment in this Summer Internship Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged (b)That the work conforms to the guidelines for presentation and style set out in the relevant documentation. Dated: August 20, 2013 Name: Utsav Randev Roll No: 06621401711 BBA (General), Class of 2014
  3. 3. Certificate I Dr. Sanjeev Singhal, Vice-President - Finance, Jubilant Life Sciences Limited, certify that Utsav Randev, student of Bachelor of Business Administration (General) at JIMS VK, Indraprastha University, New Delhi has completed the Project Report on ‘Common Size & Trend Analysis of Financial Statements’ under my guidance. Dated: August 20, 2013 (Dr. Sanjeev Singhal) Vice President, Finance Jubilant Life Sciences Ltd.
  4. 4. Acknowledgement I am deeply indebted to the people at Jubilant Life Sciences who have guided, inspired and helped me in the successful completion of this project. I owe a debt of gratitude to all of them, who were so generous with their time and expertise. I am highly intended and thankful to my industry mentor Dr. Sanjeev Singhal and my intermediate Miss Savita Gupta for their valuable support and guidance. They have taken pain to go through the project and make necessary correction as and when needed. Also I would like to thank Mr. Gurpreet Singh for his continuous guidance and support. Dated: August 23, 2013 Name: Utsav Randev Roll No: 06621401711 BBA (General), Class of 2014
  5. 5. Table of Contents S. No. Description Page No. 1 Executive Summary 3 Methodology 4 Financial Statements  Nature  Objectives  Types  Importance of Financial Statements  Limitations of Financial Statements 5 Analysis of Financial Statements  Meaning  Significance of Financial Analysis  Types of financial Analysis  Objectives of Financial Analysis  Tools of Financial Analysis  Limitations of Financial Analysis 6 Financial Statements of Indian Companies – Legal Framework 7 Findings 8 Recommendations 9 Bibliography
  6. 6. Executive Summary We know business is mainly concerned with the financial activities. Inorder to ascertain the financial status of the business every enterprise prepares certain statements, known as financial statements. Financial statements are mainly prepared for decision making purpose. But the information as is provided in the financial statements is not adequately helpful in drawing a meaningful conclusion. Thus, an effective analysis and interpretation of financial statements is required. Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements we mean two statements: (i) Profit and loss Account or Income Statement (ii) Balance Sheet or Position Statement These are prepared at the end of a given period of time. They are the indicators of profitability and financial soundness of the business concern. The term financial analysis is also known as analysis and interpretation of financial statements. It refers to the establishing meaningful relationship between various items of the two financial statements i.e. Income statement and position statement. It determines financial strength and weaknesses of the firm. Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise. Thus, the analysis and interpretation of financial statements is very essential to measure the efficiency, profitability, financial soundness and future prospects of the business units. Types of financial statement are: 1) Common size statement 2) Trend analysis In this study financial statements of 10 pharmaceutical companies listed in India are analysed. Trend analysis and comparison of financial statements is attempted to assess the efficiency and performance of companies.
  7. 7. Methodology Purpose of the Study A mere glance of the financial accounts of a company does not provide useful information, simply because they are raw in nature. The information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. A proper analysis and interpretation of financial statement can provide valuable insights into a firm’s performance. It enables investors and creditors to  Evaluate past performance and financial position  Predict future performance ResearchQuestion The study is to analyse and compare the financial statement of 10 pharmaceutical companies. For this the information is collected from the annual report of three consecutive years to prepare common size statements and do a trend analysis to track percentage changes in the balance sheets and income statements of the companies. Following 10 companies listed in India were selected and their financial information was collected for the financial years 2010-11, 2011-12 and 2012-13 1. Biocon Ltd 2. Cipla Ltd 3. Dishman Pharmaceutical. & Chemicals Ltd 4. Dr. Reddy Labs. Ltd 5. Glenmark Pharmaceutical Ltd 6. Jubilant Life Sciences Ltd 7. Lupin Labs 8. Piramal Life Sciences 9. Ranbaxy Labs. Ltd 10. Sun Pharmaceutical. Industries Ltd
  8. 8. Data Collection The secondary sources of data were used for the study as below: 1) Annual reports of companies 2) Related books and journals 3) Internet.
  9. 9. Financial Statements Financial statements are the basic and formal annual reports through which the corporate management communicates financial information to its owners and various other external parties which include investors, tax authorities, government, employees, etc. These normally refer to (a) the balance sheet (position statement) as at the end of accounting period, and (b) the profit and loss account (income statement) of a company. Now days, the cash flow statement is also taken as an integral component of the financial statements of a company. Nature of Financial Statements The chronologically recorded facts about events expressed in monetary terms for a defined period of time are the basis for the preparation of periodical financial statements which reveal the financial position as on a date and the financial results obtained during a period. The American Institute of Certified Public Accountants states the nature of financial statements as, “the statements prepared for the purpose of presenting a periodical review of report on progress by the management and deal with the status of investment in the business and the results achieved during the period under review. They reflect a combination of recorded facts, accounting principles and personal judgments.” The following points explain the nature of financial statements: 1. Recorded facts: Financial statements are prepared on the basis of facts in the form of cost data recorded in accounting books. The original cost or historical cost is the basis of recording transactions. The figures of various accounts such as cash in hand, cash at bank, bills receivable, sundry debtors, fixed assets, etc. are taken as per the figures recorded in the accounting books. The assets purchased at different times and at different prices are put together and shown at costs. As these are not based on market prices, the financial statements do not show current financial condition of the concern. 2. Accounting Conventions: Certain accounting conventions are followed while preparing financial statements. The convention of valuing inventory at cost or market price, whichever is lower, is followed. The valuing of assets at cost less depreciation principle
  10. 10. for balance sheet purposes is followed. The convention of materiality is followed in dealing with small items like pencils, pens, postage stamps, etc. These items are treated as expenditure in the year in which they are purchased even though they are assets in nature. The stationery is valued at cost and not on the principle of cost or market price, whichever is less. The use of accounting conventions makes financial statements comparable, simple and realistic. 3. Postulates: Financial statements are prepared on certain basic assumptions (pre- requisites) known as postulates such as going concern postulate, money measurement postulate, realisation postulate, etc. Going concern postulate assumes that the enterprise is treated as a going concern and exists for a longer period of time. So the assets are shown on historical cost basis. Money measurement postulate assumes that the value of money will remain the same in different periods. Though there is drastic change in purchasing power of money, the assets purchased at different times will be shown at the amount paid for them. While, preparing profit and loss account the revenue is included in the sales of the year in which the sale was undertaken even though the sale price may be received over a number of years. The assumption is known as realization postulate. 4. Personal Judgments: Under more than one circumstance, facts and figures presented through financial statements are based on personal opinion, estimates and judgments. The depreciation is provided taking into consideration the useful economic life of fixed assets. Provisions for doubtful debts are made on estimates and personal judgments. In valuing inventory, cost or market value, whichever is less is being followed. While deciding either cost of inventory or market value of inventory many personal judgments are to be made based on certain considerations. Personal opinion, judgments and estimates are made while preparing the financial statements to avoid any possibility of over statement of assets and liabilities, income and expenditure, keeping in mind the convention of conservatism. Thus, financial statements are the summarized reports of recorded facts and are prepared following the accounting concepts, conventions and requirements of Law.
  11. 11. Objectives of FinancialStatements Financial statements are the basic sources of information to the shareholders and other external parties for understanding the profitability and financial position of any concern. They provide information about the results of the concern during a specified period of time and status of the concern in terms of assets and liabilities, which provide the basis for taking decisions. Thus, the primary objective of financial statements is to assist the users in their decision-making. The specific objectives include the following: 1. To provide information about economic resources and obligations of a business: They are prepared to provide adequate, reliable and periodical information about economic resources and obligations of a business firm to investors and other external parties who have limited authority, ability or resources to obtain information. 2. To provide information about the earning capacity of the business: They are to provide useful financial information which can gainfully be utilised to predict, compare, and evaluate the business firm’s earning capacity. 3. To provide information about cash flows: They are to provide information useful to investors and creditors for predicting, comparing and evaluating, potential cash flows in terms of amount, timing and related uncertainties. 4. To judge effectiveness of management: They supply information useful for judging management’s ability to utilise the resources of a business effectively. 5. Information about activities of business affecting the society: They have to report the activities of the business organisation affecting the society, which can be determined and described or measured and which are important in its social environment. 6. Disclosing accounting policies: These reports have to provide the significant policies, concepts followed in the process of accounting and changes taken up in them during the year to understand these statements in a better way.
  12. 12. Types of FinancialStatements The financial statements generally include two statements known as balance sheet and profit and loss account which are required for external reporting and also for internal needs of the management like planning, decision-making and control. These two basic statements are supported by number schedules, annexures, supplementing the data contained in the balance sheet and profit and loss account.  Balance Sheet: The purpose of balance sheet is to show its resources and obligations for acquiring its resources i.e., assets and liabilities. According to American Institute of Public Accountants, balance sheet is “a tabular statement of summary of balances (debits and credits) carried forward after an actual and constructive closing of books of accounts and kept according to principles of accounting”. Balance sheet is the statement prepared on a particular date and shows classified properties and assets on the right hand side and obligations or liabilities on the left hand side.
  13. 13.  Profit and Loss Account or Income Statement: The profit and loss account is the accounting report which summarizes the revenues and expenses and ascertains the profit/loss for a specified accounting period. It also represents the changes in the owner’s equity between two successive periods. It is an essential statement for preparation of balance sheet and hence annexed to it. Income statement is the moving picture of an organisation and reflects the results of operations for a period. Income statement gives a quantitative interpretation of policies, expenses, knowledge, foresight and aggressiveness of the management of a business from the point of view of income, expenses, gross profit, operating profit and net profit or loss. As per the accounting concept of income, income (profit) is excess of realised revenues over related expired cost of the period and loss is known as excess of expired cost of a period over related realized revenues of the period. Thus, profit or loss is the difference between the realised revenues of the period and the related expired costs. It may be noted that normally accrual basis of accounting is followed for measuring the revenues and expenses for the period. In addition, another statement called Profit and Loss Appropriation Account is prepared to record various appropriations of profits like transfer to reserve and provision for dividends.
  14. 14. Relationshipamong FinancialStatements Uses and Importance of FinancialStatements The users of financial statements include management, investors, shareholders, creditors, government, bankers, employees and public at large. Financial statements provide the necessary information about the performance of the management to these parties interested in the organisation and help in taking appropriate economic decisions. It may be noted that the financial statements constitute an integral part of the Annual Reports of the companies which is included to are concerned which include in addition, the directors report, auditors report, corporate governance report, and management discussion and analysis. The various uses and importance of financial statements are as follows: 1. Report on stewardship function: Financial statements report the performance of the management to the shareholders. The gaps between the management performance and ownership expectations can be understood with the help of financial statements.
  15. 15. 2. Basis for fiscal policies: The fiscal policies, particularly taxation policies of the government, are related with the financial performance of corporate undertakings. The financial statements provide basic input for industrial, taxation and other economic policies of the government. 3. Basis for granting of credit: Corporate undertakings have to borrow funds from banks and other financial institutions for different purposes. Credit granting institutions take decisions based on the financial performance of the undertakings. Thus, financial statements form the basis for granting of credit. 4. Basis for prospective investors: The investors include both short-term and long-term investors. Their prime considerations in their investment decisions are security and liquidity of their investment with reasonable profitability. Financial statements help the investors to assess long- term and short-term solvency as well as the profitability of the concern. 5. Guide to the value of the investment Already Made : Shareholders of companies are interested in knowing the status, safety and return on their investment. They may also need information to take decision about continuation or discontinuation of their investment in the business. Financial statements provide information to the shareholders in taking such important decisions. 6. Aids trade associations in helping their members: Trade associations may analyse the financial statements for the purpose of providing service and protection to their members. They may develop standard ratios and design uniform system of accounts. 7. Helps stock exchanges: Financial statements help the stock exchanges to understand the extent of transparency in reporting on financial performance and enables them to call for required information to protect the interest of investors. The financial statements enable the stock brokers to judge the financial position of different concerns and take decisions about the prices to be quoted.
  16. 16. Limitations of Financial Statements Though utmost care is taken in the preparation of the financial statements and provide detailed information to the users, they suffer from the following limitations: 1. Do not reflect current situation: Financial statements are prepared on the basis of historical cost. Since the purchasing power of money is changing, the values of assets and liabilities shown in financial statement do not reflect current market situation. 2. Assets may not realise: Accounting is done on the basis of certain conventions. Some of the assets may not realise the stated values, if the liquidation is forced on the company. Assets shown in the balance sheet reflect merely unexpired or unamortised cost. 3. Bias: Financial statements are the outcome of recorded facts, accounting concepts and conventions used and personal judgments made in different situations by the accountants. Hence, bias may be observed in the results, and the financial position depicted in financial statements may not be realistic. 4. Aggregate information: Financial statements show aggregate information but not detailed information. Hence, they may not help the users in decision-making much. 5. Vital Information missing: Balance sheet does not disclose information relating to loss of markets, and cessation of agreements, which have vital bearing on the enterprise. 6. No Qualitative information: Financial statements contain only monetary information but not qualitative information like industrial relations, industrial climate, labour relations, quality of work, etc. 7. They are only interim reports: Profit and loss account discloses the profit/loss for a specified period. It does not give an idea about the earning capacity over time similarly, the financial position reflected in balance sheet is true at that point of time, and the likely change on a future date is not depicted.
  17. 17. Analysis of Financial Statements Definition  Metcalf & Titcard – Financial statement analysis is the process of evaluating relationship between component part of financial statements to obtain better understanding of firm’s financial position & performance.  Myers- Financial statement analysis is largely is study of relationship among the various financial factors in a business as disclosed by a single setup, statements and study of trend of these factors as shown in a series of statements. Meaning The process of critical evaluation of the financial information contained in the financial statements in order to understand and make decisions regarding the operations of the firm is called ‘Financial Statement Analysis’. It is basically a study of relationship among various financial facts and figures as given in a set of financial statements, and the interpretation thereof to gain an insight into the profitability and operational efficiency of the firm to assess its financial health and future prospects. The term financial analysis includes both analysis and interpretation. The term analysis means simplification of financial data by methodical classification given in the financial statements. Interpretation means explaining the meaning and significance of the data. These two are complimentary to each other. Analysis is uselesswithout interpretation, and interpretation without analysis is difficult or even impossible.
  18. 18. Significance ofFinancial Analysis Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the various items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, trade creditors, lenders, investors, labour unions, analysts and others. The nature of analysis will differ depending on the purpose of the analyst. A technique frequently used by an analyst need not necessarily serve the purpose of other analysts because of the difference in the interests of the analysts. Financial analysis is useful and significant to different users in the following ways: (a) Finance manager: Financial analysis focusses on the facts and relationships related to managerial performance, corporate efficiency, financial strengths and weaknesses and creditworthiness of the company. A finance manager must be well-equipped with the different tools of analysis to make rational decisions for the firm. The tools for analysis help in studying accounting data so as to determine the continuity of the operating policies, investment value of the business, credit ratings and testing the efficiency of operations. The techniques are equally important in the area of financial control, enabling the finance manager to make constant reviews of the actual financial operations of the firm to analyse the causes of major deviations, which may help in corrective action wherever indicated. (b) Top management: The importance of financial analysis is not limited to the finance manager alone. Its scope of importance is quite broad which includes top management in general and the other functional managers.Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most efficiently, and that the firm’s financial condition is sound. Financial analysis helps the management in measuring the success or otherwise of the company’s operations, appraising the individual’s performance and evaluating the system of internal control.
  19. 19. (c) Trade creditors: A trade creditor, through an analysis of financial statements, appraises not only the urgent ability of the company to meet its obligations, but also judges the probability of its continued ability to meet all its financial obligations in future. Trade creditors are particularly interested in the firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firm’s liquidity position. (d) Lenders: Suppliers of long-term debt are concerned with the firm’s long- term solvency and survival. They analyse the firm’s profitability overtime, its ability to generate cash to be able to pay interest and repay the principal and the relationship between various sources of funds (capital structure relationships). Long-term tenders do analyse the historical financial statements. But they place more emphasis on the firm’s projected financial statements to make analysis about its future solvency and profitability. (e) Investors: Investors, who have invested their money in the firm’s shares, are interested about the firm’s earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s capital structure to ascertain its influences on firm’s earning and risk. They also evaluate the efficiency of the management and determine whether a change is needed or not. However, in some large companies, the shareholders’ interest is limited to decide whether to buy, sell or hold the shares. (f) Labour unions: Labour unions analyse the financial statements to assess whether it can presently afford a wage increase and whether it can absorb a wage increase through increased productivity or by raising the prices. (g) Others: The economists, researchers, etc. analyse the financial statements to study the present business and economic conditions. The government agencies need it for price regulations, taxation and other similar purposes.
  20. 20. Types of financial Analysis On the basis of material used  External analysis– This analysis done by outsiders who do not have access to the internal a/c of business firm.  Internal analysis- This analysis done by persons who have access to internal A/c of business firm. On the basis of modus operandi  Horizontal analysis- It refers to comparison of financial data of a company horizontally over a number of columns for several years.  Vertical Analysis- Vertical analysis refer to the study of relationship of various item in the financial statement of one accounting period be selecting a base figure from the same year statement.  Parties Interested- Investors, management, trade creditors, lenders, suppliers, stock exchange, tax authority, researcher, employees, Govt., and their agencies.
  21. 21. Objectives of Financial Analysis Analysis of financial statements reveals important facts concerning managerial performance and the efficiency of the firm. Broadly speaking, the objectives of the analysis are to apprehend the information contained in financial statements with a view to know the weaknesses and strengths of the firm and to make a forecast about the future prospects of the firm thereby, enabling the analysts to take decisions regarding the operation of, and further investment in, the firm. To be more specific, the analysis is undertaken to serve the following purposes (objectives): • To assess the current profitability and operational efficiency of the firm as a whole as well as its different departments so as to judge the financial health of the firm. • To ascertain the relative importance of different components of the financial position of the firm. • To identify the reasons for change in the profitability/financial position of the firm. • To judge the ability of the firm to repay its debt and assessing the short-term as well as the long-term liquidity position of the firm. Through the analysis of financial statements of various firms, an economist can judge the extent of concentration of economic power and pitfalls in the financial policies pursued. The analysis also provides the basis for many governmental actions relating to licensing, controls, fixing of prices, ceiling on profits, dividend freeze, tax subsidy and other concessions to the corporate sector. It also helps the management in self-appraisal and the shareholders (owners) and others to judge the performance of the management.
  22. 22. Tools ofFinancial Analysis The most commonly used techniques of financial analysis are as follows: 1. Comparative Statements These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods. It usually applies to the two important financial statements, namely, Balance Sheet and Income Statement prepared in a comparative form. The financial data will be comparative only when same accounting principles are used in preparing these statements. If this is not the case, the deviation in the use of accounting principles should be mentioned as a footnote. Comparative figures indicate the trend and direction of financial position and operating results. This analysis is also known as horizontal analyses. There are three types of comparisons to provide decision usefulness of financial information:  Intracompany basis - Comparisons within a company are often useful to detect changes in financial relationships and significant trends.  Intercompany basis - Comparisons with other companies provide insight into a company's competitive position.  Industry averages - Comparisons with industry averages provide information about a company's relative position within the industry. Importance The benefits of a comparative statement are varied for acorporation.Because of the uniform format of the statement, it is a simple process tocompare the gross sales of a given product or all products of the companywith the gross sales generated in a previous month, quarter, or year.Comparing generated revenue from one period to a different period canadd another
  23. 23. dimension to analyzing the effectiveness of the sales effort,as the process makes it possible to identify trends such as a drop inrevenue in spite of an increase in units sold.Along with being an excellent way to broaden the understanding of thesuccess of the sales effort, a comparative statement can also help addresschanges in production costs. By comparing line items that catalogue theexpense for raw materials in one quarter with another quarter where thenumber of units produced is similar can make it possible to spot trends inexpense increases, and thus help isolate the origin of those increases. This type of data can prove helpful to allowing the company to find rawmaterials from another source before the increased price for materialscuts into the overall profitability of the company. A comparative statement can be helpful for just about any organizationthat has to deal with finances in some manner. Even non-profitorganizations can use the comparative statement method to ascertaintrends in annual fund raising efforts. By making use of the comparativestatement for the most recent effort and comparing the figures with thoseof the previous year’s event, it is possible to determine where expensesincreased or decreased, and provide some insight in how to plan thefollowing year’s event. Features  A comparative statement adds meaning to the financial data.  It is used to effectively measure the conduct of the businessactivities.  Comparative statement analysis is used for intra firm analysis and inters firm analysis.  A comparative statement analysis indicates change in amount aswell as change in %.  A positive change in amount and percentage indicates an increaseand a negative change in amount and percentage indicates adecrease.  If the value in the first year is zero then change in percentagecannot be indicated. This is the limitation of comparative statementanalysis. While interpreting the results qualitative inferences needto be drawn.  It is a popular tool useful for analysis by the financial analysts.  A comparative statement analysis cannot be used to compare more than two years financial data.
  24. 24. 2. Common Size Statements: These are the statements which indicate the relationship of different items of a financial statement with some common item by expressing each item as a percentage of the common item. The percentage thus calculated can be easily compared with the results corresponding percentages of the previous year or of some other firms, asthe numbers are brought to common base. Such statements also allow an analyst to compare the operating and financing characteristics of two companies of different sizes in the same industry. Thus, common-size statements are useful, both, in intra-firm comparisons over different years and also in making inter-firm comparisons for the same year or for several years. This analysis is also known as ‘Vertical analyses’. Comparisons between Companies (Cross-Sectional Analysis) Common size financial statements can be used to compare multiplecompanies at the same point in time. A common-size analysis is especiallyuseful when comparing companies of different sizes. It often is insightful to compare a firm to the best performing firm in its industry (benchmarking). A firm also can be compared to its industry as a whole. To compare to the industry, the ratios are calculated for each firm in the industry and an average for the industry is calculated. Comparative statements then may be constructed with the company of interest in onecolumn and the industry averages in another. The result is a quick overview of where the firm stands in the industry with respect to keyitems on the financial statements Features 1. A common size statement analysis indicates the relation of each component to the whole. 2. In case of a Common Size Income statement analysis Net Sales istaken as 100% and in case of Common Size Balance Sheet analysistotal funds available/total capital employed is considered as 100%. 3. It is used for vertical financial analysis and comparison of twobusiness enterprises or two years financial data.
  25. 25. 4. Absolute figures from the financial statement are difficult tocompare but when converted and expressed as percentage of netsales in case of income statement and in case of Balance Sheet aspercentage of total net assets or total funds employed it becomes more meaningful to relate. 5. A common size analysis is a type of ratio analysis where in case of income statement sales is the denominator (base) and in case of Balance Sheet funds employed or total net assets is thedenominator (base) and all items are expressed as a relation to it. 6. In case of common size statement analysis the absolute figures areconverted to proportions for the purpose of inter-firm as well as intra-firm analysis. Limitations As with financial statements in general, the interpretation of common sizestatements is subject to many of the limitations in the accounting dataused to construct them. For example: 1. Different accounting policies may be used by different firms or within the same firm at different points in time. Adjustments should be made for such differences. 2. Different firms may use different accounting calendars, so theaccounting periods may not be directly comparable.
  26. 26. 3. Trend Analysis: It is a technique of studying the operational results and financial position over a series of years. Using the previous year data of a business enterprise, trend analysis can be done to observe the percentage changes over time in the selected data. The trend percentage is the percentage relationship, which each item of different years bear to the same item in the base year. Trend analysis is important because, with its long run view, it may point to basic changes in the nature of the business. By looking at a trend in a particular ratio, one may find whether the ratio is falling, rising or remaining relatively constant. From this observation, a problem is detected or the sign of good management is found. Procedure for Calculating Trend Percentage To calculate the change over a longer period of time 1. Select the base year. 2. For each line item, divide the amount in each non base year by the amount in the base year and multiply by 100. 3. Generally, the first year is the base year, so its percentages are all 100.0. The percentages in the other years are calculated by dividing each amount in a particular year by the corresponding amount in the base year and multiply by 100. Trend Percentage = Present year value × 100 Base year value Features  In case of a trend analysis all the given years are arranged in an ascending order.  The first year is termed as the “Base year” and all figures of thebase year are taken as 100%.  Item in the subsequent years are compared with that of the baseyear.
  27. 27.  If the percentages in the following years is above 100% it indicatesan increase over the base year and if the percentages are below100% it indicates a decrease over the base year.  A trend analysis gives a better picture of the overall performance of the business.  A trend analysis helps in analysing the financial performance over aperiod of time.  A trend analysis indicates in which direction a business is movingi.e. upward or downwards.  A trend analysis facilitates effective comparative study of thefinancial performance over a period of time.  For trend analysis at least three years financial data is essential.Broader the base the more reliable is the data and analysis. 4. Ratio Analysis It describes the significant relationship which exists between various items of a balance sheet and a profit and loss account of a firm. As a technique of financial analysis, accounting ratios measure the comparative significance of the individual items of the income and position statements. It is possible to assess the profitability, solvency and efficiency of an enterprise through the technique of ratio analysis. 5. Cash Flow Analysis It refers to the analysis of actual movement of cash into and out of an organisation. The flow of cash into the business is called as cash inflow or positive cash flow and the flow of cash out of the firm is called as cash outflow or a negative cash flow. The difference between the inflow and outflow of cash is the net cash flow. Cash flow statement is prepared to project the manner in which the cash has been received and has been utilised during an accounting year as it shows the sources of cash receipts and also the purposes for which payments are made. Thus, it summarises the causes for the changes in cash position of a business enterprise between dates of two balance sheets.
  28. 28. Limitations of Financial Analysis Though financial analysis is quite helpful in determining financial strengths and weaknesses of a firm, it is based on the information available in financial statements. As such, the financial analysis also suffers from various limitations of financial statements. Hence, the analyst must be conscious of the impact of price level changes, window dressing of financial statements, changes in accounting policies of a firm, accounting concepts and conventions, personal judgment, etc. Some other limitations of financial analysis are: 1. Financial analysis does not consider price level changes. 2. Financial analysis may be misleading without the knowledge of the changes in accounting procedure followed by a firm. 3. Financial analysis is just a study of interim reports. 4. Monetary information alone is considered in financial analysis while non- monetary aspects are ignored. 5. The financial statements arepreparedonthe basis of on-going concept, as such it does not reflect the current position.
  29. 29. FinancialStatements of Indian Companies – LegalFramework 1. Financial analysis does not consider price level changes. 2. Financial analysis may be misleading without the knowledge of the changes in accounting procedure followed by a firm. 3. Financial analysis is just a study of interim reports. 4. Monetary information alone is considered in financial analysis while non-monetary aspects are ignored. 5. The financial statements are prepared on the basis of on-going concept, as such, it does not reflect the current position. 6. Governed by the Companies Act, 1956 7. SEBI also forms rules under the Listing Agreement 8. Form and Content of Balance Sheet as per the ‘revised Schedule VI’ of the Companies Act 1956 and to comply with applicable Accounting Standards (under Section 211(3 A) – (3C) of the Companies Act, 1956) notified under Companies (Accounting Standard) Rules, 2006 9. Currently, 28 Accounting Standards notified by the Central Government (AS 1 to AS 7 & AS 9 to AS 29). AS 30, AS 31 & AS 32 are not yet notified and, thus, are recommendatory 10. In India, the Central Government has also prescribed Indian Accounting Standards (Ind AS) which are converged with IFRS, however, the date on which these will come into force is yet to be notified 11. Accounting Standards are called:  AS in India  IFRS in case a country adopts IFRS issued by IASB  US GAAP in USA
  30. 30. Findings Analysis of the Financial Statement Analysis of financial statements is attempted to assess the efficiency and performance of companies. The financial statements here I consider are Profit & Loss A/C and Balance Sheet of the companies. The analysis and interpretation of financial statements is very essential to measure the efficiency, profitability, financial soundness and future prospects of the business units. Here we consider two different tools for analyzing financial statements of the Pharmaceutical companies considering three years values. 1. Common Size Analysis: The common Size statements (Balance Sheet and Income Statement) are shown in analytical percentages. The figures of these statements are shown as percentages of total assets, total liabilities and revenue from operations.  Common Size Balance Sheet: A statement where balance Sheet items are expressed in the ratio of each asset to total assets and the ratio of each liability is expressed in the ratio of total liabilities is called Common Size Balance Sheet.  Common Size Profit & Loss Account: The items in P&L A/C can be shown as percentages of Net Revenue on Operations to show the relations of each item.
  31. 31. BalanceSheet(2012)(RupeesinCrores) ClassificationBioconLtd.CiplaLtd. Dishman Pharma.& Chemicals Ltd. Dr.Reddy Labs.Ltd. Glenmark Pharma.Ltd. JubilantLife SciencesLtd. LupinLabs. PiramalLife Sciences Ranbaxy Labs.Ltd. SunPharma. Industries Ltd. EQUITYANDLIABILITIES Shareholders’funds Sharecapital100016116148482711598933521151036 Reservesandsurplus1996473906588066330215871973936451111061709580051 2096475506749467178218571989837344111411921081086 Non-currentliabilities LongTermBorrowings6052301685130254424222134921719568- DeferredTaxLiabilities349232314820023821141905101-1423 LongTermProvisions64929443212-1569256202739986 OtherLong-termLiabilities--3869063778-3761331036320 16032645605356027905470326712430 CurrentLiabilities Short-termBorrowings86810128011020422214847857797528068403 TradePayables25116008493733427057067715431385884002 OtherCurrentLiabilities7693581548798446441868250348613321625 ShortTermProvisions1488211133532417048842122360278315155 5636118038115306236274146662035721347780810185 TOTAL2820389941442991034063169162469615871374412969993701 ASSETS Non-currentAssets FixedAssets TangibleAssets67573003464731896721631766316972632193089797 IntagibleAssets93-559175738103129627236 IntangibleAssetsUnderDevelopment-343--341669-143131- CapitalWork-in-Progress825462257346176656252135732314652489 Non-CurrentInvestments166438618706227071083319380687367643128132122 Long-termLoansandAdvances53430198996318955241783805117101076595 OtherNon-CurrentAssets--253-1018720-412621628 1468241943885754169243304686931326119336313551268 CurrentAssets CurrentInvestments4906573-2070-217-347308450 Inventories3404182511913132671759593311236267173187862 TradeReceivables445015199646194353587403814908242143598373 CashandBankBalances4005564584904752032192132834813277 Short-termLoansandAdvances3617741047252986703203271585850413932 OtherCurrentAssets-54326766778681761211841467540 135214800492377361156003026118116656442434 TOTAL2820389941442991034063169162469615871374412969993701
  32. 32. BalanceSheet(2012)(%Values) ClassificationBioconLtd.CiplaLtd. Dishman Pharma.& Chemicals Ltd. Dr.Reddy Labs.Ltd. Glenmark Pharma.Ltd. JubilantLife SciencesLtd. LupinLabs. PiramalLife Sciences Ranbaxy Labs.Ltd. SunPharma. Industries Ltd. EQUITYANDLIABILITIES Shareholders’funds Sharecapital3.551.791.120.820.850.261.450.251.631.11 Reservesandsurplus70.7982.1645.6664.1568.1231.6059.1980.8113.1885.43 Non-currentliabilities LongTermBorrowings2.150.0220.914.968.0338.772.191.5815.090.00 DeferredTaxLiabilities1.242.582.180.190.753.383.090.730.001.52 LongTermProvisions2.300.320.310.210.002.510.420.152.111.05 OtherLong-termLiabilities0.000.0026.810.062.460.000.610.977.990.02 CurrentLiabilities Short-termBorrowings3.080.118.879.877.017.7613.937.1021.640.43 TradePayables8.906.685.897.098.5411.3111.622.276.624.27 OtherCurrentLiabilities2.733.9810.739.522.032.994.063.5310.270.67 ShortTermProvisions5.282.350.923.132.221.413.452.6221.465.50 TOTAL100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00 ASSETS Non-currentAssets FixedAssets TangibleAssets23.9633.3932.2118.346.8228.2727.564.6014.8910.46 IntagibleAssets0.330.000.390.000.241.180.170.940.480.25 IntangibleAssetsUnderDevelopment0.003.820.000.000.112.670.001.040.100.00 CapitalWork-in-Progress2.935.1317.835.972.074.045.800.171.132.66 Non-CurrentInvestments5.904.2912.9621.9634.1831.0211.1649.2124.1234.28 Long-termLoansandAdvances18.940.0013.796.1130.146.696.180.857.797.04 OtherNon-CurrentAssets0.000.000.180.003.211.150.0030.020.170.03 CurrentAssets CurrentInvestments17.406.370.002.000.000.350.002.520.029.02 Inventories12.0720.298.2612.835.559.5018.241.9413.358.39 TradeReceivables15.7816.896.6818.7911.326.4624.211.7611.078.94 CashandBankBalances1.420.610.458.211.503.250.310.1021.8614.17 Short-termLoansandAdvances1.288.607.265.122.125.134.416.243.894.20 OtherCurrentAssets0.000.6022.640.652.740.281.970.611.130.58 TOTAL100100100100100.00100.00100.00100.00100.00100.00
  33. 33. Interpretation Intra-companies: 1. An analysis of pattern of financing of the companies shows that Dishman Pharmaceutical & Chemicals Ltd is most traditionally financed in fixed assets with 50.43% followed by Cipla Ltd with 42.34%. 2. The percentages show that some companies have high working capital. The percentage of current liabilities is less than the percentage of current assets in the following companies -  Cipla Ltd - The percentage of current liabilities is 13.12% whereas the current assets are 53.37%. The inventories and trade receivables account for 20.9% and 16.89% respectively of total current assets.  Sun Pharmaceutical. Industries Ltd - The percentage of current liabilities is 10.87% whereas the current assets are 45.29%. The current investments and cash & bank balances account for 9.02% and 14.17% respectively of total current assets.  Biocon Ltd - The percentage of current liabilities is 19.98% whereas the current assets are 47.94%. The current investments and trade receivables account for 17.40% and 15.78% respectively of total current assets.  Dishman Pharmaceutical & Chemicals Ltd - The percentage of current liabilities is 26.41% whereas the current assets are 45.29%. Other current assets and cash & bank balances account for 22.64% of total current assets.  Dr. Reddy Labs Ltd - The percentage of current liabilities is 26.41% whereas the current assets are 45.29%. Other current assets and cash & bank balances account for 22.64% of total current assets.  Lupin Labs - The percentage of current liabilities is 33.05% whereas the current assets are 49.14%. Trade receivables and Inventories account for 22.64% of total current assets. 3. Piramal Life Sciences and Ranbaxy Labs Ltd higher percentage of current liabilities than percentage of current assets.
  34. 34. Profit&LossAccount(2012)(RupeesinCrores) ClassificationBioconLtd.CiplaLtd. Dishman Pharma.& Chemicals Ltd. Dr.Reddy Labs.Ltd. Glenmark Pharma.Ltd. JubilantLife SciencesLtd. LupinLabs. PiramalLife Sciences Ranbaxy Labs.Ltd. SunPharma. Industries Ltd. INCOME Revenuefromoperations(gross)16,0537,07446,90366,44315,64727,33254,2691,17461,40431,602 Less:Exciseduty49597563-405256-92142021279527 Revenuefromoperations(net)15,5586,97846,34066,03815,39126,41153,8481,15361,12431,076 Otherincome6661481,17781855189355342,5721,941 Total(I)16,2247,12647,51768,21516,19826,50053,8831,68865,60733,017 EXPENDITURE Costofrawmaterialsandpackingmaterials6,9712,30117,17817,3863,37712,40015,92253915,2877,131 Purchasesoftradedgoods8575561,2983,0761,0492,4375,993818,0901,767 Increase)/decreaseininventoriesoffinishedgoods,tradedgoodsandwork-in-progress-414111,048-1,048-129-933-1,325-13-49271 Employeebenefitexpenses1,9167284,5228,6612,4682,0725,81215210,1962,611 Otherexpenses2,8931,8007,79815,1245,7711,70015,828.4053125,5266,255 Total(II)12,2235,70440,76555,62313,35725,15943,8361,56763,43818,477 (EBITDA(I-II))4,001--------- Depreciationandamortisation9402823,1663,0112111,3201,320761,611642 Financecosts17275,7546366091,5442872002,970- Profitbeforetax3,0441,4216,75212,5922,841-45910,04712163,43814,540 TAXEXPENSE Currenttax5592782,0974,2755541332,01923-19570 Less-MATcreditentitlement-23---3752-374-40-- Deferredtax-(47)20171-80792153588-132 Totaltaxexpense489-2,268-188350---702 PROFITFORTHEYEAR2,5551,1244,4849,1242,6533508,044131-1,62313,838
  35. 35. Profit&LossAccount(2012)(%Values) ClassificationBioconLtd.CiplaLtd. Dishman Pharma.& Chemicals Ltd. Dr.Reddy Labs.Ltd. Glenmark Pharma.Ltd. JubilantLife SciencesLtd. LupinLabs. PiramalLife Sciences Ranbaxy Labs.Ltd. SunPharma. Industries Ltd. INCOME Revenuefromoperations(gross)103.18101.39101.219,241.03101.66103.49100.78101.78100.46101.69 Less:Exciseduty3.181.391.21-56.331.66-3.490.781.780.461.69 Revenuefromoperations(net)100100100100100100100100100100 Otherincome4.282.132.54113.773.580.340.0646.334.216.25 Total(I)104.28102.13102.549,487.48105.24100.34100.06146.33107.33106.25 EXPENDITURE Costofrawmaterialsandpackingmaterials44.8132.9837.072,418.0821.9446.9529.5746.7225.0122.95 Purchasesoftradedgoods5.517.962.80427.826.829.2311.137.0213.245.69 Increase)/decreaseininventoriesoffinishedgoods,tradedgoodsandwork-in-progress-2.660.162.26-145.76-0.84-3.53-2.46-1.08-0.810.23 Employeebenefitexpenses12.3210.449.761,204.5916.047.8510.7913.1616.688.40 Otherexpenses18.5925.7916.832,103.4837.506.4446.0641.7620.13 Total(II)78.5681.7587.977,736.1686.7895.2681.41135.82103.7859.46 (EBITDA(I-II))25.720.000.000.000.000.000.000.000.000.00 Depreciationandamortisation6.044.046.83418.781.375.002.456.622.642.07 Financecosts0.110.3812.4288.463.955.850.5317.334.860.00 Profitbeforetax19.5720.3714.571,751.3218.46-1.7418.6610.51103.7846.79 TAXEXPENSE Currenttax3.593.984.53594.583.600.503.751.95-0.031.83 Less-MATcreditentitlement-0.150.000.000.002.430.01-0.69-3.490.000.00 Deferredtax0.000.290.37-112.240.060.810.670.710.000.42 Totaltaxexpense3.140.004.890.001.221.320.000.000.002.26 PROFITFORTHEYEAR16.4216.119.681,268.9817.241.3214.9411.33-2.6644.53
  36. 36. Interpretation: Intra-companies: 1. The following companies has high percentage of Profit for the year 2012 –  Sun Pharmaceutical. Industries Ltd has the highest profit of the year among all the other pharmaceutical companies i.e. 44.53%. Profit before text was 46.79%.  Glenmark Pharmaceutical Ltd has the profit of 17.24%.  Biocon Ltd has the profit of 16.42%.  Cipla Ltd has the profit of 16.11%.  Lupin Labs has the profit of 14.94%. 2. Following companies has the highest percentage of Expenditure in year 2012 -  Piramal Life Sciences - 135.82%  Ranbaxy Labs Ltd - 103.78%  Jubilant Life Sciences Ltd - 95.26%  Dishman Pharmaceutical & Chemicals Ltd - 87.97% 3. Following companies has the highest percentage of Income in year 2012 –  Piramal Life Sciences - 146.33%  Ranbaxy Labs Ltd - 107.33%  Sun Pharmaceutical. Industries Ltd. – 106.25  Glenmark Pharmaceutical Ltd - 105.24
  37. 37. 2. Trend Analysis: Trend analysis is a technique of studying several financial statements (Balance Sheet & Income Statement) over a series of years. In this analysis the trend percentages are calculated for each item by taking the figure of that item for the base year taken as 100. Generally, the first year is taken as a base year. This analysis is done to see the upward or downward trend of the financial statements throughout three different years.  Trend Analysis of Balance Sheet: The different periods of balance sheet is compared with base year in order to know the fluctuation of the items based on one year.  Trend Analysis of Profit & Loss Account: The trend analysis of P&L A/C shows the analysis on the different periods of Profit & Loss statement assuming one year as base. The trend of increasing or decreasing in the items of P&L statement is analyzed.
  38. 38. Biocon Ltd  The trend analysis of Biocon reveals that the percentage increase in current liabilities is more than percentage increase in current assets during all three years. There is a huge Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 1,000 100 1,000 100 1,000 100 Reserves and surplus 21,068 114 19,964 108 18,468 100 Non-current liabilities Long Term Borrowings 400 61 605 92 658 100 Deferred Tax Liabilities 302 76 349 88 396 100 Long Term Provisions 1,083 156 649 93 695 100 Other Long-term Liabilities - - - - - - Current Liabilities Short-term Borrowings 773 80 868 90 963 100 Trade Payables 2,650 133 2,511 126 1,997 100 Other Current Liabilities 679 119 769 135 571 100 Short Term Provisions 2,177 169 1,488 116 1,287 100 6,279 130 5,636 117 4,818 100 TOTAL 30,132 116 28,203 108 26,035 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 8,455 127 6,757 101 6,662 100 Intagible Assets 59 - 93 - 134 100 Intangible Assets Under Development - - - - - - Capital Work-in-Progress 512 50 825 80 1,027 100 Non-Current Investments 1,660 180 1,664 181 920 100 Long-term Loans and Advances 4,713 113 5,343 128 4,162 100 Other Non-Current Assets - - - - - 100 Current Assets Current Investments 4,530 92 4,906 125 3,939 100 Inventories 3,589 131 3,404 124 2,747 100 Trade Receivables 4,270 102 4,450 106 4,181 100 Cash and Bank Balances 1,792 85 400 19 2,103 100 Short-term Loans and Advances 510 319 302 189 160 100 Other Current Assets 42 71 59 100 - 100 14,733 109 13,521 103 13,130 100 TOTAL 30,132 116 28,203 108 26,035 100
  39. 39. increase in the current liabilities during financial year 2011-2012 and 2012-2013 due to increase in the large value of short term provisions.  The share capital of the company doesn’t change. This shows that the company is not issuing its share.  The working capital is sufficient to finance investment of the company due to exceed of current assets over current liabilities.  Income of Biocon is in increasing trend due to increase in the net revenue from operations. A significant increase in the net revenue from operations is seen in financial year 2013.  The percentage increase in the income is more than percentage increase in expenditure.  The deferred tax is negative after which negatively affects the company in generating profit. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 19,833 124 16,053 100 16,005 100 Less: Excise duty 453 92 495 126 394 100 Revenue from operations (net) 19,380 125 15,558 100 15,611 100 Other income 515 77 666 116 572 100 Total (I) 19,895 123 16,224 100 16,183 100 EXPENDITURE Cost of raw materials and packing materials 8,300 119 6,971 113 6,173 100 Purchases of traded goods 857 100 857 170 503 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-179 43 -414 149 -278 100 Employee benefit expenses 2,276 119 1,916 132 1,456 100 Other expenses 4,069 141 2,893 129 2,245 100 Total (II) 15,323 125 12,223 121 10,099 100 (EBITDA (I - II) ) 4,572 114 4,001 66 6,084 100 Depreciation and amortisation 951 101 940 104 902 100 Finance costs 12 71 17 170 10 100 Profit before tax 3,470 114 3,044 59 5,172 100 TAX EXPENSE Current tax 760 136 559 94 594 100 Less - MAT credit entitlement - -23 - - 100 Deferred tax -47 100 -47 313 -15 100 Total tax expense 713 146 489 84 579 100 PROFIT FOR THE YEAR 2,757 108 2,555 56 4,593 100
  40. 40. Cipla Ltd  The trend analysis of Cipla reveals that the percentage increase in current liabilities is more than percentage increase in current assets during all three years. There is a huge increase in Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 161 100 161 100 161 100 Reserves and surplus 8,709 118 7,390 115 6,452 100 Non-current liabilities Long Term Borrowings 1 25 2 75 3 100 Deferred Tax Liabilities 281 121 232 109 212 100 Long Term Provisions 47 163 29 139 21 100 Other Long-term Liabilities 30 100 30 - - 100 Current Liabilities Short-term Borrowings 965 9,653 10 2 438 100 Trade Payables 827 121 686 104 662 100 Other Current Liabilities 243 104 233 77 300 100 Short Term Provisions 230 104 221 111 199 100 2,265 197 1,149 72 1,599 100 TOTAL 11,493 128 8,994 106 8,448 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 3,418 114 3,003 105 2,868 100 Intagible Assets - - - - 100 Intangible Assets Under Development 340 99 343 136 253 100 Capital Work-in-Progress 10 - - - 347 100 Non-Current Investments 514 111 462 106 436 100 Long-term Loans and Advances 374 95 394 - - 100 Other Non-Current Assets 0 129 0 - - 100 Current Assets Current Investments 2,087 364 573 256 224 100 Inventories 2,343 128 1,825 97 1,883 100 Trade Receivables 1,645 108 1,519 101 1,497 100 Cash and Bank Balances 105 191 55 66 84 100 Short-term Loans and Advances 653 85 765 99 771 100 Other Current Assets 2 4 54 63 85 100 2,405 100 2,394 98 2,438 100 TOTAL 11,493 128 8,994 106 8,448 100
  41. 41. the current liabilities during financial year 2011-2012 and 2012-2013 due to increase in the large value of trade payables.  The share capital of the company doesn’t change. This shows that the company is not issuing its share.  The working capital is sufficient to finance investment of the company due to exceed of current assets over current liabilities.  Income of Cipla is in increasing trend due to increase in the net revenue from operations. An increase in the net revenue from operations is seen in financial year 2013.  The percentage increase in the income is more than percentage increase in expenditure.  The deferred tax has increased in 2013 which adds up the net profit value. It is an asset to the company. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 8,295 117 7,075 111 6,399 100 Less: Excise duty 92 95 97 144 68 100 Revenue from operations (net) 8,202 118 6,978 110 6,331 100 Other income 229.13 155 148.3 162 91.64 100 Total (I) 8,432 118 7,126 111 6,423 100 EXPENDITURE Cost of raw materials and packing materials 2,647 115 2,301 98 2,356 100 Purchases of traded goods 707 127 555.55 83 671 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-291 -2,587 11 -8 -139 100 Employee benefit expenses 969 133 728 135 540 100 Other expenses 2,051 114 1,800 114 1,582 100 Total (II) 6,420 113 5,704 108 5,271 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 303 107 282 114 248 100 Finance costs 33 125 27 206 13 100 Profit before tax 2,012 142 1,421 123 1,151 100 Tax expenses Current tax 386 139 278 122 228 100 Less - MAT credit entitlement 70 - - - 70 100 Deferred tax 48.75 244 20 60 33.3 100 Total tax expense - - - - - - PROFIT FOR THE YEAR 1,507 134 1,124 117 960 100
  42. 42. Dishman Pharmaceutical & Chemicals Ltd  The trend analysis of Dishman Pharmaceutical & Chemicals Ltd reveals that the percentage increase in current assets is much more than percentage increase in current liabilities during Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 1,614 100 1,614 100 1,614 100 Reserves and surplus 70,928 108 65,880 105 62,524 100 Non-current liabilities Long Term Borrowings 27,453 91 30,168 98 30,891 100 Deferred Tax Liabilities 4,381 139 3,148 106 2,977 100 Long Term Provisions 474 107 443 100 443 100 Other Long-term Liabilities 4,685 95 4,930 141 3,500 100 Current Liabilities Short-term Borrowings 18,048 141 12,801 71 17,965 100 Trade Payables 9,443 111 8,493 71 11,901 100 Other Current Liabilities 10,683 69 15,487 168 9,228 100 Short Term Provisions 1,793 134 1,335 109 1,229 100 39,967 105 38,115 95 40,322 100 TOTAL 149,501 104 144,299 101 142,299 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 67,881 146 46,473 97 48,050 100 Intagible Assets 373 67 559 89 627 100 Intangible Assets Under Development - - - - - - Capital Work-in-Progress 4,879 19 25,734 129 19,896 100 Non-Current Investments 18,706 100 18,706 100 18,714 100 Long-term Loans and Advances 15,325 77 19,899 85 23,295 100 Other Non-Current Assets 122 100 122 50 243 100 Current Assets Current Investments - - - - - - Inventories 12,776 107 11,913 96 12,425 100 Trade Receivables 6,279 65 9,646 76 12,697 100 Cash and Bank Balances 686 106 645 150 431 100 Short-term Loans and Advances 22,475 200 11,254 190 5,922 100 Other Current Assets - - 32,676 104 31,474 100 42,216 78 54,221 107 50,524 100 TOTAL 149,501 104 144,168 101 142,299 100
  43. 43. all three years. The current liabilities decreased in year 2011-12 and then increased in year 2012-13.  The share capital of the company doesn’t change. This shows that the company is not issuing its share.  The working capital is sufficient to finance investment of the company due to exceed of current assets over current liabilities.  Income of Dishman Pharmaceutical & Chemicals Ltd is in increasing trend despite a decreasing trend in net revenue of operations  The percentage increase in the income is more than percentage increase in expenditure.  The deferred tax has increased significantly in 2013 which adds up the net profit value. It is an asset to the company. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 49,019 105 46,903 110 42,620 100 Less: Excise duty 555 99 563 104 539 100 Revenue from operations (net) 48,464 105 46,340 110 42,082 100 Other income 1359.15 115 1177.17 81 1458.64 100 Total (I) 49,823 105 47,517 109 43,540 100 EXPENDITURE Cost of raw materials and packing materials 17,350 101 17,178 106 16,255 100 Purchases of traded goods 238 18 1298.31 20 6,584 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress331 32 1,048 -59 -1,781 100 Employee benefit expenses 5,821 129 4,522 96 4,710 100 Other expenses 7,968 102 7,798 129 6,065 100 Total (II) 40,353 99 40,765 105 38,686 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 3,534 112 3,166 - - 100 Finance costs 5,110 89 5,754 - - 100 Profit before tax 9,470 140 6,752 139 4,854 100 Tax expenses Current tax 2,100 100 2,097 212 987 100 Less - MAT credit entitlement 181.7 - - - 408.55 100 Deferred tax 1234.19 720 171.4 65 262.8 100 Total tax expense 3,152 139 2268.2 392 579 100 PROFIT FOR THE YEAR 6,318 141 4,484 112 4,012 100
  44. 44. Dr. Reddy Labs Ltd • The trend analysis of Dr. Reddy Labs Ltd reveals that the percentage increase in current liabilities is more than percentage increase in current assets during all three years. There is a huge increase in the current liabilities during financial year 2011-2012 and 2012-2013 due to increase in the large value of other current liabilities. Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 849 100 848 100 846 100 Reserves and surplus 76,985 116 66,330 112 59,356 100 Non-current liabilities Long Term Borrowings 63 1 5,130 100 5,130 100 Deferred Tax Liabilities 937 469 200 20 1,008 100 Long Term Provisions 298 141 212 108 197 100 Other Long-term Liabilities 28 44 63 105 60 100 Current Liabilities Short-term Borrowings 15,828 155 10,204 110 9,311 100 Trade Payables 7,678 105 7,334 91 8,069 100 Other Current Liabilities 13,011 132 9,844 167 5,889 100 Short Term Provisions 4,214 130 3,241 117 2,768 100 40,731 133 30,623 118 26,037 100 TOTAL 119,891 116 103,406 112 92,634 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 23,355 123 18,967 112 16,893 100 Intagible Assets 515 51,500 1 6 17 100 Intangible Assets Under Development - - - - - - Capital Work-in-Progress 4,232 69 6,176 113 5,460 100 Non-Current Investments 21,826 96 22,707 92 24,620 100 Long-term Loans and Advances 3,501 55 6,318 69 9,117 100 Other Non-Current Assets 209 - 100 - 100 Current Assets Current Investments 1,966 95 2,070 100 - 100 Inventories 15,265 115 13,267 125 10,632 100 Trade Receivables 29,639 153 19,435 110 17,705 100 Cash and Bank Balances 9,191 108 8,490 1,282 662 100 Short-term Loans and Advances 8,885 168 5,298 92 5,778 100 Other Current Assets 1,307 193 677 39 1,750 100 49,022 145 33,900 131 25,895 100 TOTAL 119,891 116 103,406 112 92,634 100
  45. 45. • The share capital of the company doesn’t change. This shows that the company is not issuing its share. • The working capital is not sufficient to finance investment of the company due to less margin of difference between current assets and current liabilities.  Trend analysis of Dr. Reddy Labs Ltd reveals that the absolute change in income is constant. The revenue from operations increased by 130% from 2010-11 to 2011-12 and by 263% from 2011-12 to 2012-13.  There is a percentage decrease in expenditure in FY 2012-13 due to a decrease in the inventories of finished goods.  The deferred tax is decreasing significantly through the years, which negatively affects the company in generating profit. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 81,462 123 66,443 126 52,537 100 Less: Excise duty -718 177 -405 114 -356 100 Revenue from operations (net) 1,893 263 719 130 554 100 Other income 1417 173 818 68 1196 100 Total (I) 85,757 126 68,215 126 54,241 100 EXPENDITURE Cost of raw materials and packing materials 22,773 131 17,386 130 13,351 100 Purchases of traded goods 3,931 128 3076 93 3,310 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-1,006 96 -1,048 133 -790 100 Employee benefit expenses 11,381 131 8,661 119 7,274 100 Other expenses 19,444 129 15,124 295 5,128 100 Total (II) 68,225 123 55,623 127 43,722 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 3,128 104 3,011 121 2,479 100 Finance costs 614 97 636 1,200 53 100 Profit before tax 17,532 139 12,592 120 10,519 100 Tax expenses Current tax 4,140 97 4,275 322 1,328 100 Less - MAT credit entitlement - - - - - - Deferred tax 737 -91 -807 314 -257 100 Total tax expense - - - - - - PROFIT FOR THE YEAR 12,655 139 9,124 102 8,934 100
  46. 46. Glenmark Pharmaceutical Ltd • The trend analysis of Glenmark Pharmaceutical Ltd reveals that the percentage increase in current liabilities is more than percentage increase in current assets during all three years. There is a huge increase in the current liabilities during financial year 2011-2012 and 2012-2013 due to increase in the large value of other current liabilities. Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 271 100 271 100 270 100 Reserves and surplus 24,961 116 21,587 111 19,527 100 Non-current liabilities Long Term Borrowings - 2,544 93 2,746 100 Deferred Tax Liabilities 286 120 238 104 229 100 Long Term Provisions - - - - Other Long-term Liabilities 849 109 778 2,493 31 100 Current Liabilities Short-term Borrowings 3,088 139 2,221 28 7,974 100 Trade Payables 4,262 158 2,705 154 1,759 100 Other Current Liabilities 4,427 687 644 64 1,008 100 Short Term Provisions 711 101 704 355 198 100 12,488 199 6,274 57 10,938 100 TOTAL 38,855 123 31,691 94 33,742 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 2,671 124 2,163 100 2,160 100 Intagible Assets 85 114 75 97 78 100 Intangible Assets Under Development 35 105 34 144 23 100 Capital Work-in-Progress 1,689 258 656 210 313 100 Non-Current Investments 12,943 119 10,833 104 10,412 100 Long-term Loans and Advances 9,228 97 9,552 62 15,401 100 Other Non-Current Assets 1,809 178 1,018 192 531 100 Current Assets Current Investments - - - - Inventories 1,902 108 1,759 112 1,570 100 Trade Receivables 4,851 135 3,587 189 1,893 100 Cash and Bank Balances 1,678 353 475 154 309 100 Short-term Loans and Advances 669 100 670 283 237 100 Other Current Assets 1,294 149 868 107 814 100 8,493 152 5,601 172 3,254 100 TOTAL 38,855 123 31,691 94 33,742 100
  47. 47. • The share capital of the company doesn’t change. This shows that the company is not issuing its share. • The working capital is insufficient to finance investment of the company due to exceed of current liabilities over current assets.  Income of Glenmark Pharmaceutical Ltd is in decreasing trend despite an increase in the net revenue of operations in financial year 2012-13.  The percentage increase in the expenditure is more than percentage increase in income.  The deferred tax has increased significantly in 2012-13 which adds up the net profit value. It is an asset to the company. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 19,493 125 15,647 135 11,629 100 Less: Excise duty - - - - - - Revenue from operations (net) - - - - - - Other income 1162.45 211 551.04 77 717.52 100 Total (I) 20,655 128 16,198 131 12,347 100 EXPENDITURE Cost of raw materials and packing materials 4,158 123 3,377 140 2,405 100 Purchases of traded goods 1,411 134 1049.47 120 872 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-37 29 -129 -92 140 100 Employee benefit expenses 3,030 123 2,468 142 1,742 100 Other expenses 7,607 132 5,771 59 9,839 100 Total (II) 16,856 126 13,357 - - 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 250 119 211 101 210 100 Finance costs 437 72 609 71 858 100 Profit before tax 3,800 134 2,841 113 2,508 100 Tax expenses Current tax 657 119 554 82 674 100 Less - MAT credit entitlement -109.34 25 -436 152 -286.15 100 Deferred tax 47.81 549 8.71 -518 -1.68 100 Total tax expense -62 -33 187.98 49 386 100 PROFIT FOR THE YEAR 3,861 146 2,653 125 2,122 100
  48. 48. Jubilant Life Sciences Ltd  The trend analysis of Jubilant Life Sciences Ltd reveals that the percentage increase in current liabilities is more than percentage increase in current assets during all three years. Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 159 100 159 100 159 100 Reserves and surplus - - 19,739 93 21,247 100 Non-current liabilities Long Term Borrowings 20,084 83 24,222 108 22,391 100 Deferred Tax Liabilities 2,419 114 2,114 111 1,899 100 Long Term Provisions 2,274 145 1,569 508 309 100 Other Long-term Liabilities - - - - - - Current Liabilities Short-term Borrowings 6,326 130 4,847 65 7,412 100 Trade Payables 9,348 132 7,067 170 4,159 100 Other Current Liabilities 4,713 252 1,868 130 1,432 100 Short Term Provisions 1,136 129 884 23 3,843 100 21,522 147 14,666 87 16,847 100 TOTAL 64,917 105 61,742 98 62,851 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 20,901 118 17,663 118 14,917 100 Intagible Assets 954 129 738 158 468 100 Intangible Assets Under Development 1,876 112 1,669 113 1,475 100 Capital Work-in-Progress 258 10 2,521 94 2,695 100 Non-Current Investments 19,785 102 19,380 105 18,523 100 Long-term Loans and Advances 4,532 98 4,632 114 4,052 100 Other Non-Current Assets 2 59 4 100 - 100 Current Assets Current Investments - - 217 185 118 100 Inventories 6,112 103 5,933 147 4,047 100 Trade Receivables 3,933 97 4,038 121 3,345 100 Cash and Bank Balances 2,559 126 2,028 21 9,853 100 Short-term Loans and Advances 3,412 124 2,749 83 3,316 100 Other Current Assets 593 351 169 402 42 100 10,497 117 8,985 54 16,556 100 TOTAL 64,917 105 61,742 98 62,851 100
  49. 49. There is a huge increase in the current liabilities during financial year 2011-2012 and 2012- 2013 due to increase in the large value of short term provisions.  The share capital of the company doesn’t change. This shows that the company is not issuing its share.  The working capital is insufficient to finance investment of the company due to exceed of current liabilities over current assets.  Income of Jubilant Life Sciences Ltd is in decreasing trend while the net revenue of operations remains constant through the years.  The deferred tax has increased significantly in 2012-13 which adds up the net profit value. It is an asset to the company. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 32,664 120 27,332 120 22,853 100 Less: Excise duty -1,201 130 -921 120 -768 100 Revenue from operations (net) 31,463 119 26,411 120 22,085 100 Other income 89.16 100 89.41 174 51.45 100 Total (I) 31,552 119 26,500 120 22,136 100 EXPENDITURE Cost of raw materials and packing materials 15,286 123 12,400 138 9,014 100 Purchases of traded goods 1,917 79 2436.79 108 2,248 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-242 26 -933 298 -313 100 Employee benefit expenses 2,487 120 2,072 120 1,728 100 Other expenses 2,028 119 1,700 117 1,450 100 Total (II) 30,155 120 25,159 132 19,091 100 (EBITDA (I - II) ) - - - - - 100 Depreciation and amortisation 1,522 115 1,320 132 999 100 Finance costs 1,712 111 1,544 331 467 100 Profit before tax -128 28 -459 -15 2,999 100 Tax expenses Current tax - - 133 15 885 100 Less - MAT credit entitlement - - 2 0 -603.38 100 Deferred tax 305.14 142 215.11 -276 -78.07 100 Total tax expense 305 87 349.69 172 203 100 PROFIT FOR THE YEAR 305 87 350 13 2,796 100
  50. 50. Lupin Labs  The trend analysis of Lupin Labs reveals that the percentage increase in current assets is much more than percentage increase in current liabilities during all three years. Decrease Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 895 100 893 100 892 100 Reserves and surplus 47,572 131 36,451 119 30,634 100 Non-current liabilities Long Term Borrowings 292 22 1,349 4 31,527 100 Deferred Tax Liabilities 2,329 122 1,905 107 1,786 100 Long Term Provisions 684 197 346 124 279 100 Other Long-term Liabilities 114 30 376 105 358 100 Current Liabilities Short-term Borrowings 5,261 61 8,577 113 7,575 100 Trade Payables 8,694 124 6,984 119 5,876 100 Other Current Liabilities 2,189 87 2,503 320 783 100 Short Term Provisions 2,427 110 2,202 128 1,714 100 18,572 92 20,267 127 15,949 100 TOTAL 70,457 114 61,587 118 52,118 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 20,006 118 16,972 127 13,396 100 Intagible Assets 130 127 103 68 150 100 Intangible Assets Under Development - - - - - - Capital Work-in-Progress 2,401 67 3,573 81 4,421 100 Non-Current Investments 6,880 100 6,873 101 6,809 100 Long-term Loans and Advances 3,620 94 3,836 125 3,071 100 Other Non-Current Assets - - - - - - Current Assets Current Investments - - - - - - Inventories 13,308 118 11,236 134 8,411 100 Trade Receivables 18,743 126 14,908 121 12,343 100 Cash and Bank Balances 201 105 192 51 375 100 Short-term Loans and Advances 2,840 106 2,684 136 1,970 100 Other Current Assets 2,327 192 1,211 107 1,128 100 24,111 127 18,995 120 15,815 100 TOTAL 70,457 114 61,587 118 52,118 100
  51. 51. in current liabilities is due to a decrease in the short term borrowings in year 2011-12 and 2012-13.  The share capital of the company doesn’t change. This shows that the company is not issuing its share.  The working capital is sufficient to finance investment of the company due to exceed of current assets over current liabilities.  Income of Lupin Labs is in increasing trend due to increasing net revenue of operations over the years.  The percentage increase in the income is more than percentage increase in expenditure.  The deferred tax has decreased significantly in 2012-13 which negatively affects the company in generating profits. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 71,844 132 54,269 120 45,302 100 Less: Excise duty 619 147 420 119 354 100 Revenue from operations (net) 71,225 132 53,848 120 44,949 100 Other income 233.1 668 34.9 21 165.8 100 Total (I) 71,458 133 53,883 119 45,115 100 EXPENDITURE Cost of raw materials and packing materials 19,272 121 15,922 115 13,824 100 Purchases of traded goods 7,760 129 5992.7 156 3,842 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-1,824 138 -1,325 25,986 -5 100 Employee benefit expenses 7,131 123 5,812 118 4,912 100 Other expenses 20,047 - 15,828.4 0 - 12,786 100 Total (II) - - 43,836 120 36,678 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 1,501 114 1,320 127 1,043 100 Finance costs 333 116 287 104 276 100 Profit before tax 17,238 172 10,047 119 8,437 100 Tax expenses Current tax 4,182 207 2,019 120 1,686 100 Less - MAT credit entitlement - - -374 25 -1473.8 100 Deferred tax 264.1 74 358.3 265 135.4 100 Total tax expense - - - - - - PROFIT FOR THE YEAR 12,604 157 8,044 99 8,100 100
  52. 52. Piramal Life Sciences  The trend analysis of Piramal Life Sciences Labs reveals that the percentage increase in current assets is much more than percentage increase in current liabilities in financial year 2012-13. Balance Sheet (Rupees in Crores) Classification 2013 2012 2011 EQUITY AND LIABILITIES Shareholders’ funds Share capital 35 100 35 103 34 100 Reserves and surplus 10,521 95 11,106 95 11,665 100 Non-current liabilities Long Term Borrowings 733 338 217 91 239 100 Deferred Tax Liabilities - - 101 109 92 100 Long Term Provisions 20 99 20 129 16 100 Other Long-term Liabilities 76 57 133 70 189 100 Current Liabilities Short-term Borrowings 3,729 382 975 2,072 47 100 Trade Payables 332 106 313 113 276 100 Other Current Liabilities 533 110 486 140 347 100 Short Term Provisions 363 101 360 150 240 100 4,957 232 2,134 234 911 100 TOTAL 16,342 119 13,744 105 13,146 100 ASSETS Non-current Assets Fixed Assets Tangible Assets 654 104 632 119 533 100 Intagible Assets 119 93 129 97 133 100 Intangible Assets Under Development 120 84 143 24,319 1 100 Capital Work-in-Progress 45 197 23 79 29 100 Non-Current Investments 8,821 130 6,764 1,402 483 100 Long-term Loans and Advances 432 369 117 196 60 100 Other Non-Current Assets 2,174 53 4,126 71 5,785 100 Current Assets Current Investments 802 231 347 31 1,101 100 Inventories 262 98 267 116 230 100 Trade Receivables 243 100 242 116 209 100 Cash and Bank Balances 24 183 13 1 1,754 100 Short-term Loans and Advances 1,411 164 858 94 917 100 Other Current Assets 1,234 1,466 84 4 1,911 100 2,912 243 1,198 25 4,791 100 TOTAL 16,342 119 13,744 105 13,146 100
  53. 53.  The share capital of the company is in increasing trend. This shows that the company is issuing its share.  The working capital is sufficient to finance investment of the company due to exceed of current assets over current liabilities.  Trend analysis of Piramal Life Sciences reveals that the percentage change in income is decreasing. The revenue from operations increased by 20% from 2011-12 to 2012-13.  There is a percentage decrease in expenditure in FY 2012-13 due to a decrease in the inventories of finished goods and cost of raw materials and packing materials.  The deferred tax is decreasing significantly through the years, which negatively affects the company in generating profit. Profit & Loss A/c (Rupees in Crores) Classification 2013 2012 2011 INCOME Revenue from operations (gross) 1,432 122 1,174 142 827 100 Less: Excise duty 29 140 21 163 13 100 Revenue from operations (net) 1,403 122 1,153 142 814 100 Other income 376.01 70 534.43 113 472.29 100 Total (I) 1,779 105 1,688 131 1,287 100 EXPENDITURE Cost of raw materials and packing materials 633 118 539 152 355 100 Purchases of traded goods 79 98 80.96 100 81 100 Increase)/ decrease in inventories of finished goods, traded goods and work-in-progress-2 16 -13 33 -38 100 Employee benefit expenses 159 105 152 105 145 100 Other expenses 659 124 531 133 399 100 Total (II) 2,027 129 1,567 145 1,080 100 (EBITDA (I - II) ) - - - - - - Depreciation and amortisation 78 102 76 129 59 100 Finance costs 420 210 200 250 80 100 Profit before tax -248 -204 121 1 16,416 100 Tax expenses Current tax 84 374 23 1 3,683 100 Less - MAT credit entitlement - - -40 - - 100 Deferred tax -100.53 -1,226 8.2 -65 -12.52 100 Total tax expense -16 172 -9.5 100 - 100 PROFIT FOR THE YEAR -232 -177 131 1 12,746 100
  54. 54. Inter-companies: In year 2011 2012 2013
  55. 55. Recommendations
  56. 56. Conclusion  If properly analyzed and interpreted, financial statements can provide valuable insight into a firm’s performance.  Analysis of financial statements is of interest to lenders (short term as well as long term) investors, security analysts, managers and others.  Financial statement analysis may be done for a variety of purpose, which may range from a simple analysis of the short term liquidity position of the firm to a comprehensive assessment of the strength and weakness of the firm in various areas.  It is helpful in assessing corporate excellence, judging credit worthiness, forecasting bond ratings, predicting bankruptcy and assessing market risk.  The financial Statements are the responsibility of the company’s management the analysis and interpretation of financial statements is essential to bring out the mystery behind the figure in financial statements.  The balance sheet and profit and loss account are in agreement with the books of account. Limitations  Time period was limited to study such a vast topic.  The authenticity of the suggestions and recommendations depend upon the rationality of the data provided.  Information beyond a limit was not made available by the company.  Data available was not sufficient enough for conducting the study.
  57. 57. Bibliography Websites 1. www.investopedia.com 2. http://wiki.answers.com 3. http://financial-dictionary.thefreedictionary.com 4. http://www.rushabhinfosoft.com/Webpages/BHTML/CH-36.HTM 5. www.moneycontrol.com/ 6. www.money.msn.com/ 7. http://www.slideshare.net/ 8. http://www.scribd.com/ Books 1. R.P. Rustagi “Financial Management theory, concepts and problems”, Taxmann Publishing Pvt Ltd, 2005 2. T.S Grewal “Analysis of Financial Statements” , Sultan Chand & Sons, 2006 3. I.M. Pandey,Financial management, Vikas Publication, 2011 4. Dr. J. B. Gupta, Financial Management, Taxmann Publication Pvt Ltd, 2004 5. Ravi M. Kishore, Financial Management, Taxmann Publishing Pvt Ltd, 2007

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